European Court of Justice on transfer of undertakings

In today’s entry I will depart for a moment from the immigration issues to turn the readers’ attention to the recent ruling of the European Court of Justice on transfer of undertakings (case no. C-463/09 CLECE SA v Maria Valor and Ayuntamiento de Cobisa, judgment of January 20, 2011).

The EC transfer of undertakings legislation is contained in the Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses.

So far the ECJ has reached a number of judgments according to which takeover of tasks by another organization (e.g. through contracting out) might trigger transfer of undertakings and the consequent takeover of related staff.

In case no. C-463/09 the problem was the other way round, i.e. whether a situation in which a public authority terminates a contract for outsourced services (here: cleaning) and undertakes those services by itself by hiring new employees for that purpose is caught by transfer of undertakings. In its ruling the ECJ stated that the mere taking over by the public authority of the cleaning work that was previously carried out by the contractor, cannot, of itself, indicate the existence of a transfer undertakings. In consequence, employees of the contractor who did the cleaning services have not been taken on by the public authority as a result of terminating the contract and assuming the cleaning work back.